Inflation this year in the Netherlands is on average lower than in recent years. It will also be lower than expected just after the start of the war in the Middle East. Inflation will also be lower than the eurozone average. De Nederlandsche Bank made this striking forecast this Friday in its spring estimates.
Striking, because the war, which has driven up energy prices, continues to rage. And in recent years, Dutch inflation has actually been higher than that in most other European countries.
According to DNB’s ‘basic estimate’ – the central bank also presented less favorable scenarios – inflation in the Netherlands will average 2.7 percent on an annual basis this year. In 2025 that was 3 percent. DNB also adjusted the inflation estimate for 2026 downwards compared to a forecast in March. At that time, the central bank still assumed 3 percent inflation.
It is not that the war in the Middle East has no effect on inflation in the Netherlands. In December, the last estimate before the war, DNB still assumed 2.4 percent inflation this year. But the difference with the latest estimate of 2.7 percent can be called small. For example, the European Central Bank assumes 3 percent inflation for the entire euro zone this year, higher than DNB expects for the Netherlands. Due to rising inflation in the euro area, the ECB raised interest rates on Thursday.
Why this relatively small inflation effect that DNB predicts for the Netherlands? DNB also adjusted inflation expectations downwards for the year 2027 (from 2.9 to 2.3 percent). Inflation is expected to be 2.4 percent in 2028.
Bas ter Weel, the recently appointed Director of Monetary Affairs at DNB, explained this during a press meeting on Friday. The Dutch economy, he said, is “very dependent on world trade.” It is growing less rapidly due to the war, which is harming Dutch activity. Dutch economic growth, which was already cooling down, will fall further due to the war, from 1.8 percent on an annual basis in 2025 to 0.8 percent in 2026. “This has a depressing effect on inflation,” said Ter Weel.
Falling electricity price
Why did DNB still assume more inflation in March? According to Ter Weel, DNB then assumed higher oil and gas prices, based on market expectations that are now lower.
The Dutch economy, Ter Weel said, has become considerably less susceptible to higher inflation in recent years as a result of oil and gas price shocks. The use of oil and gas has decreased considerably – especially since Russia’s large-scale invasion of Ukraine in 2022. The electricity price is actually falling, he said, thanks to “investments in sustainable energy”. “We have now become less dependent on energy from elsewhere.”
DNB links this to a political message: “Structurally reduce dependence on fossil energy
and strengthen energy infrastructure such as the overloaded power grid,
and do this in a European context,” says the report accompanying the estimates. Other economic institutes – ECB, industrial country club OECD, International Monetary Fund – are also urging governments to accelerate the energy transition. Not only to slow down climate change, but also to make economies more resilient to energy price shocks.
DNB emphasizes how great the uncertainty is surrounding the spring forecast. Three scenarios are included in the basic estimate: a ‘mild’ scenario, an ‘adverse’ scenario and a ‘severe’ scenario. The most important variables are oil and gas prices, which turn out to be lower or higher, or remain high for a shorter or longer time than in the basic forecast.
In the mild scenario, inflation is even more favorable (2.6 percent in 2026, falling to 2.2 percent in 2028). In the unfavorable scenario, on the other hand, inflation will reach just under 3 percent in 2026, 2027 and 2028. The most severe scenario takes into account inflation that will peak at 4.6 percent in 2027. In neither of these scenarios will the Dutch economy end up in a recession.